Farallon outplayed StanChart to win BCA<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
It was all too clear who was about to become the new owner of
\nBank Central Asia (BCA) when State Minister for State Enterprises
\nLaksamana Sukardi said the selection was based on the final bids
\nsubmitted on Jan. 28.<\/p>\n
Laksamana named the consortium led by the San Francisco-based
\ninvestment firm Farallon Capital Management in a decision that
\ntook many by surprise.<\/p>\n
\"We returned to the final bids that were submitted on Jan.
\n28,\" he told reporters explaining the announcement he was about
\nto make.<\/p>\n
The government announced on Thursday that Farallon was the
\nwinning bidder for a 51 percent stake in BCA worth about Rp 5.3
\ntrillion (approximately US$530 million).<\/p>\n
The U.S investment firm teamed up with local cigarette maker
\nPT Djarum, which joined the consortium under Alaerka Investment
\nLtd.<\/p>\n
Farallon's win, beating out long-time favorite Standard
\nChartered Bank Plc from England and its consortium, marked an
\nunexpected end to the nearly two-year effort to sell BCA to a
\nstrategic investor.<\/p>\n
Laksamana said Farallon was selected because it had proposed
\nthe better bid by the submission deadline of Jan. 28.<\/p>\n
Four parties submitted final bids, but only Farallon and
\nStanChart passed Bank Indonesia's so-called fit-and-proper test.<\/p>\n
The one-and-half-month wait that followed the submission of
\nthe final bids should have been a quiet period for Farallon and
\nStandard Chartered to wait out the end result of their bids.<\/p>\n
But soon after the final bids were placed, news reports
\nsurfaced that StanChart's bid was inferior to Farallon's.<\/p>\n
Although StanChart offered a slightly higher price than
\nFarallon, the bank attached conditions on its sale and purchase
\nagreement (SPA) that were reportedly too burdensome.<\/p>\n
Laksamana later said one condition had been to place 15
\npercent of BCA's sale proceeds into an escrow account from which
\nStanChart would pay any claims raised against it because of BCA.<\/p>\n
Another demand, he said, was to defer payment on the second 21
\npercent installment to Dec. 31.<\/p>\n
Laksamana was quick to add that StanChart did improve its bid.
\nHowever, he opted to reject the revised bid \"for the sake of the
\nbidding process' credibility\".<\/p>\n
When news hit that StanChart's demands were considered
\nburdensome, the Indonesian Bank Restructuring Agency (IBRA)
\noffered all parties a chance to revise their bids, claiming that
\nthis was part of the bidding process.<\/p>\n
This prompted Farallon to charge that final bids should remain
\nfinal and that changing them was tantamount to manipulation.<\/p>\n
StanChart and IBRA argued that every bidder had the same
\nopportunity to revise their bids.<\/p>\n
Farallon threatened to pull out from the process, a threat
\nthat was met with skepticism by IBRA chief I Putu Gede Ary Suta,
\nwho called it a strategy to discredit StanChart through the
\nmedia.<\/p>\n
Nonetheless it raised questions about IBRA's bidding process,
\nand the government took charge in the final week of the sale
\nprocess.<\/p>\n
Laksamana said the government stepped in to ensure the
\ncredibility of the sale's outcome by having the winner selected
\non a ministerial level.<\/p>\n
Also working to Farallon's advantage was the mass
\ndemonstration by BCA employees opposed to the sale.<\/p>\n
The employees main concern was the prospect of mass layoffs.
\nBut their fears were mainly focused on the prospect of BCA being
\ntaken over by StanChart, whose earlier attempt to acquire Bank
\nBali ran aground due to employees rejecting foreign management.<\/p>\n
The protest by BCA employees resulted in the government
\ndelaying the announcement of the bid winner, as it sought
\nassurances from StanChart that it would not lay off employees.<\/p>\n
Farallon was largely left out of the spotlight and its
\nrepresentative here was reportedly in London, leaving only a team
\nof lawyers and its spokespersons in Jakarta.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/farallon-outplayed-stanchart-to-win-bca-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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